William A. Von Hoene, Jr. explains to USEA public policy forum what's at stake for the nation's nuclear fleet

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4/22/2014 8:00 PM

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WASHINGTON, D.C. (April 23, 2014) - Unless policymakers take action soon, a series of additional early nuclear power plant retirements could threaten the reliability of the nation's electric grid and hinder the country's ability to meet its carbon reduction goals, Exelon Senior Executive Vice President and Chief Strategy Officer William A. Von Hoene, Jr. told members of the United States Energy Association (USEA) today.

In a keynote address at the 2014 USEA Annual Membership Meeting & Public Policy Forum at the National Press Club, Von Hoene said that current government policies and market structures fail to account for the full value that nuclear power provides as an always-on source of carbon-free energy.

"The unfortunate reality for nuclear right now is that despite being the largest, most reliable and lowest-emitting power plants - and among the lowest cost - they are not getting recognized or compensated for those attributes," he said.

In addition to low natural gas prices and slow demand growth, which have driven down wholesale electricity prices, Von Hoene pointed to market-distorting policies that subsidize renewable generation as part of a perfect storm of challenges threatening the continued operation of many nuclear plants.

"Renewable energy is an important and growing part of our own generation portfolio and a critical component of our efforts to advance clean energy," he said, "but government policies designed to incent investment in low-carbon resources end up threatening that very goal by putting increased economic pressure on certain nuclear plants."

Von Hoene said the performance of the nation's generating fleet during the severe cold of the past winter underscored the critical role of nuclear plants in ensuring the reliability of the electric grid. At the height of the polar vortex, he explained, when some fuel sources faltered, the U.S. nuclear fleet continued to generate electricity at its usual, industry-leading productivity rates.

"Our nuclear fleet proved critical to keeping the lights and heat on for millions of homes and businesses," he said. While the PJM electricity market serving large swaths of the Midwest and Northeast experienced record winter demand, most other resources experienced higher-than-expected outages rates. In fact, Von Hoene said, "many natural gas-fired plants didn't run, either because they couldn't get fuel, couldn't start, or because other units were more cost-effective. Similarly, wind was generating at only about one-quarter of its nameplate."

On the day after Earth Day, Von Hoene emphasized that, in the absence of a federal, market-based carbon policy, closing nuclear plants prematurely would deal a major setback to the nation's efforts to reduce carbon emissions.

"We simply cannot achieve our emissions reduction goals without the U.S. nuclear fleet," he said. "The loss of 25 percent of existing nuclear facilities would cut U.S. progress toward achieving its 2020 climate change goals in half. In fact, closing even a few nuclear plants could make achieving state and national carbon reduction goals difficult or impossible."

Von Hoene emphasized the urgent need to repair policy shortcomings if the nation wishes to safeguard the value of existing U.S. nuclear plants and their role in ensuring a future energy supply that is reliable, clean and affordable. He also commended policymakers, including those at the Federal Energy Regulatory Commission, Department of Energy and state commissions, who have acknowledged the need for action.

"Our state and federal lawmakers need to seriously examine, now, how their policies must change if they want to preserve the benefits of the nation's nuclear fleet," he said. "This is a national challenge, and so we need attention of all of the nation's policymakers to solve it."